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[Official Guidance]
Updated Operational Compliance List from IRS, for Plan Qualification Requirements Effective in 2020
"The Operational Compliance List is provided per Rev. Proc. 2016-37 ... to help plan sponsors and practitioners achieve operational compliance by identifying changes in qualification requirements effective during a calendar year. - Final regulations relating to hardship distributions (84 Fed. Reg. 49651)
- Extension of temporary relief for closed defined benefit pension plans (Notice 2019-49)
- Additional temporary nondiscrimination relief for closed defined benefit pension plans (Notice 2019-60)
- Increase in 10 percent cap for automatic enrollment safe harbor after first plan year (SECURE Act, Section 102)
- Rules relating to election of safe harbor 401(k) status (SECURE Act, Section 103)
- Portability of lifetime income options (SECURE Act, Section 109)
- Employees of church-controlled organizations participating in section 403(b)(9) retirement income accounts (SECURE Act, Section 111)
- Penalty-free withdrawals from retirement plans for individuals in case of birth or adoption (SECURE Act, Section 113)
- Increase in age for required beginning date for mandatory distributions (SECURE Act, Section 114)
- Difficulty of care payments treated as compensation for retirement contribution limitations (SECURE Act, Section 116)
- Modification of nondiscrimination rules to protect older, longer service participants (SECURE Act, Section 205)
- Modification of required distribution rules for designated beneficiaries (SECURE Act, Section 401)
- Provisions relating to plan amendments (SECURE Act, Section 601)"
Internal Revenue Service [IRS]
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[Guidance Overview]
Key Points About the DOL's New Fiduciary Rule
"The trigger for the application of the proposed exemption is that the investment advice fiduciary is already a regulated entity in the form of an RIA, registered broker dealer, bank or insurance company and their employees, agents and representatives. Apparently, a 'country squire' who is not associated with one of these entities cannot avail themselves of the exemption.... All five prongs of the five-part test must apply for a financial institution or investment professional to be an investment advice fiduciary when making a rollover recommendation."
Troutman Sanders
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[Guidance Overview]
DOL Issues Fiduciary Rules on Plan Investments
"The Technical Amendment ... returns the applicable regulations and prohibited transaction exemptions back to where they were prior to the 2016 Rule. The Technical Amendment also clarifies and confirms standards for participant education with respect to investments. It is effective immediately, without any notice and comment period ... [T]he Proposed Exemption prohibits an investment advice fiduciary from receiving a fee for investment advice provided to a Retirement Investor to rollover Plan benefits, unless certain conditions are satisfied.... [T]he Financial Institution would be required to document the reasons that the advice to roll over was in the Retirement Investor's best interest."
RSM US
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Plan Sponsor and Service Provider Submit Motions to Dismiss in Response to Data Breach Suit
"Further demonstrating the lack of clarity on who is liable when a plan suffers a data breach, on June 30th, Abbott Laboratories and Alight Solutions, pointed fingers at each other in dueling motions to dismiss a complaint that alleged both were fiduciaries in connection with a plan data breach that stole $245,000 from a participant's plan account. The Northern District of Illinois will now have to decide if, based on the complaint's allegations, either Abbott or Alight (or both) could have [1] fiduciary responsibility with respect to the theft of funds from the participant's account and whether [2] the plan participant has pled a plausible claim of fiduciary breach." [Bartnett v. Abbott Laboratories, No. 20-2127 (N.D. Ill. complaint filed Apr. 3, 2020)]
The Wagner Law Group
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How and Why to Design Pensions for Full Funding in the Real Word
109 pages. "[F]inancial planners often suggest that retiring workers should aim to replace 70 to 80% of their annual preretirement earnings. Social Security benefits typically replace around 35% of the typical worker's preretirement earnings, and the purpose of this Article is to show how pensions could and should be designed to replace, say, 40% of the typical worker's preretirement earnings throughout her retirement years. In particular, because so many public and private pension plans are underfunded, this Article focuses on how to fully fund those pensions."
Prof. Jonathan Barry Forman, via Marquette Law Review
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How the Retirement and Annuity Industries Are Helping Employees Generate Retirement Income
"Considering the complex nature of draw-down strategies and participants' willingness to learn about the subject, recordkeepers should provide resources that help those who want to learn about, model or review their retirement income plans. Income projection tools that provide decumulation analysis can be effective resources for creating draw-down strategies[.]"
Corporate Insight
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[Opinion]
The DOL's Proposed Fiduciary Rule: Some 'Top of Mind' Thoughts
"[W]hile clearly this is a watered-down version of the previous Fiduciary Rule, it is not so weak as to have no teeth at all. There are a decent number of hoops to jump through to take advantage of the prohibited transaction exemptions, which will likely discourage many bad actors from attempting to exploit participants.... The major negative ... is the fact that the DOL could not think of something better than reverting to a five-part test written in 1975 to determine an investment advice fiduciary."
Cammack Retirement Group
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Benefits in General
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Arbitration and Class Action Waivers Under ERISA
30 presentation slides. Topics: [1] ERISA framework; [2] Arbitration and class action waivers: recent decisions; and [3] Designing arbitration clauses for ERISA plans.
American Benefits Council
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Protecting the Rights of Taxpayers Who Rely on IRS 'Frequently Asked Questions' (FAQs)
"Because FAQs aren't subject to thorough review, Treasury and the IRS may later decide some of them are wrong and change them. That is reasonable. But what about taxpayers who followed an FAQ and now find that: [1] the IRS is taking the opposite position on audit; [2] the IRS is imposing a penalty on the taxpayer for taking the position the FAQ had advised; and [3] the taxpayer can't locate the original FAQ because the IRS has changed it and removed the initial FAQ from its website? ... To protect the rights of taxpayers who follow FAQs, [the Taxpayer Advocate Service makes] the following recommendations: [1] The IRS should continue to use FAQs to provide timely guidance to taxpayers where appropriate.... [2] The IRS should include the versions and dates of each FAQ on its website or create an archive of obsolete or modified FAQs, including
applicable dates, so that taxpayers can locate an FAQ that was in effect at the time they filed their returns." [BenefitsLink note: Pages on the IRS website (and other government sites) are regularly archived by the Wayback Machine; prior versions of FAQs and other documents generally can be found there. The Wayback Machine is maintained by Internet Archive, a 501(c)(3) organization unaffiliated with any government entity.]
Taxpayer Advocate Service, Internal Revenue Service [IRS]
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Selected Discussions on the BenefitsLink Message Boards
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Individual Has Both Schedule C and Form W-2 Income (Two Different Businesses)
"A client has received both Schedule C income and W-2 income, both of which came from his own businesses (sole proprietorship and an S corp). How can we run the DB calculation in this case? Should I use earned income + W-2 as the compensation basis? What about deductions? How can we break down the contribution among sole proprietorship and S corp?"
BenefitsLink Message Boards
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Counting FMLA Pay for Purposes of Qualified Plan's Definition of Compensation
"Re the definition of compensation for qualified plan purposes (for a plan that uses W-2 comp) -- As I understand it, absent a specific exclusion in the plan, FMLA wages, even if under a 'special' category for employer Social Security payroll taxes or whatever, would still be considered as wages for purposes of calculating employer match, whatever. Did anything override this?"
BenefitsLink Message Boards
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BenefitsLink Retirement Plans Newsletter, ISSN no. 1536-9587. Copyright 2020 BenefitsLink.com, Inc. All materials contained in this newsletter are protected by United States copyright law and may not be reproduced, distributed, transmitted, displayed, published or broadcast without the prior written permission of BenefitsLink.com, Inc., or in the case of third party materials, the owner of those materials. You may not alter or remove any trademark, copyright or other notices from copies of the content.
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